Auckland Council's investment income drops

Holding company's returns drop $30.3m despite rise in share price of airport stake Ports of Auckland delivered a dividend to Auckland Council Investments of $26.1 million. Photo / Dean Purcell

Total income from Auckland Council Investments dropped $30.3 million in the past year, even though the share price of its Auckland International Airport stake is up.

The council holding company, which owns 100 per cent of Ports of Auckland and 22.4 per cent of Auckland International Airport, suffered an income decline from last year's $132.8 million to $102.5 million in the year to June 30.

The value of Auckland Council Investments' (ACIL) airport shareholding rose by 22 per cent as the share price increased from $2.44 to $2.97, equating to a $156.8 million gain, and dividends received were $35.1 million, compared with $26.9 million in 2011/12.

Chief executive Gary Swift said the group's income drop was partly due to rising costs.

"Operating expenses were higher than the previous year, largely because of the port and that was due to higher volumes of containers. There's more equipment and people working so it costs more."

However, group income was also up, from $182.9 million to $190.7 million, also mainly due to the port's rising fortunes.

ACIL's investments in the airport, port and Henderson's Auckland Film Studios were worth about $1.5 billion, Swift said.

That was made up of an $800 million-plus airport stake, the port valued in 2010 at $620 million and the film studios worth about $9 million.

Separately, he said, ACIL had a management contract with Auckland Council to run a diversified financial investment portfolio worth about $300 million. Those assets, invested with fund managers - including Devon Funds Management and AMP - were units in unit trusts here and overseas which returned 18.4 per cent in the last year, Swift said.

The return from that diversified financial assets portfolio allowed a distribution of $24 million to the council this year.

The port, which had suffered industrial problems, delivered a dividend to ACIL of $26.1 million, up on last year's $17.5 million.

Swift said union troubles had affected the bottom line.

"The industrial dispute has been negative in the sense that we have not achieved all the operational benefits we would have anticipated if that dispute had been fully resolved. We don't have all the productivity increases we would have expected."

More than half the stevedoring workforce was on the new flexible, 12-hour roster shifts, Swift said, but the rest were working on the fixed eight-hour shifts.

The annual financial statements also referred to the disputes.

"Negotiations are continuing with the Maritime Union of New Zealand over the renegotiation of the new collective employment agreement," the statements said.

"Seafuels Ltd (owned 50 per cent by Ports of Auckland) dispute with the Rena salvage operator Svitzer Salvage is currently being heard by the courts."

Mayor Len Brown said ACIL had yielded good returns. "An $85.2 million result from Auckland Council's investments is great news for Auckland ratepayers and vindicates the position I have taken not to sell down council investments.

"These investments give Auckland the financial capacity to make investments in essential economic infrastructure without every dollar having to come from the ratepayer," Brown said.

Swift said returns from the businesses ACIL owns were up.

"It was pleasing to receive $61.2 million in dividends from Auckland International Airport and Ports of Auckland. This is up from $44 million in 2011/12. In addition, ACIL was able to distribute $24 million from the diversified financial assets portfolio during the year. The value of investments we manage on behalf of the council for the benefit of Auckland also increased."